BRAZIL Law and Practice Contributed by: Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Azevedo Sette Advogados
3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Under Brazilian law, economic activities involv - ing the production or circulation of goods and services may be carried out through various forms of business associations. The most com - mon structures are corporations ( sociedades anônimas , or SAs) and limited liability companies ( sociedades limitadas , or Ltdas). Corporations require more formalities in their organisation and operation compared to limited liability companies. This includes mandatory publication of certain corporate acts and docu - ments, which typically involves higher publica - tion/operational costs than for limited liability companies. Owing to their more sophisticated structure, corporations are often chosen for joint venture projects or investments that demand greater complexity, such as those involving access to public capital markets or the issuance of secu - rities and bonds. On the other hand, for wholly owned subsidiaries, limited liability companies are generally preferred – given their simpler and more cost-effective structure. There are no minimum capital requirements for the formation of limited liability companies or corporations, except in specific cases, such as for financial institutions and trading companies. Corporations may be organised with authorised capital, which means the total capital author - ised in the articles of association (AoA) may exceed the amount initially subscribed. In this case, any increase in subscribed capital up to the authorised limit requires an amendment to the AoA. Corporations must have a minimum of two shareholders and the capital may be formed
• submission of periodic reports to Brazilian authorities detailing its activities, financial performance, and compliance with commit - ments; • investors may be encouraged or required to reinvest a portion of their profits into the Brazilian economy, particularly in ways that create additional jobs or enhance local devel - opment; and • some investments may be subject to non- compete clauses that prevent foreign inves - tors from engaging in direct competition with local businesses for a certain period or under specific conditions. 2.4 Right to Appeal Foreign investors can challenge a denial of investment authorisation by the authorities in court. It is typically expected to exhaust admin - istrative remedies, unless the refusal clearly vio - lates a constitutional or legal right. The adminis - trative review may involve requesting clarification by the regulatory authority and appealing within the agency or to a higher administrative body, if allowed in the circumstances. In the event that administrative options are exhausted or deemed ineffective, the investor may file a lawsuit in Brazilian judicial courts. In general, common options include a civil lawsuit, writ of mandamus ( mandado de segurança ), and constitutional claims. Although litigation in Brazil may take several years, the timing for challenging such decisions will depend on the type of legal action being pursued. If successful, these legal challenges can lead to the annulment of the decision and approval of the investment.
64
CHAMBERS.COM
Powered by FlippingBook